Mediterranean Gas Outlook Is Threatened by War

The population in the eastern Mediterranean region is expected to increase by as much as 35 percent in the next 20 years. Natural gas deposits in the Levant Basin are expected to keep the energy needs of the growing population satisfied indefinitely. Governments in the region are working quickly to get excess natural gas to the international market. Cyprus is already taking preliminary steps to start construction on a liquefied natural gas terminal and energy companies are queuing up in anticipation of an Israeli court decision on gas export polices. Ongoing conflict in Syria and territorial disputes between Israel and Lebanon, however, may interfere with ambitions for the natural gas deposits in the Mediterranean Sea.

Cyprus reported its first offshore natural gas discovery just two years ago and is already laying the groundwork for an export terminal. Construction could start as early as 2015 and LNG exports are planned for 2020. Executives there said they’d likely have to make accommodations for natural gas from Israel and Lebanon in their future export plans. Last year, one of Australia’s biggest energy companies, Woodside Petroleum Ltd., said it would fork over more than $2 billion for a stake in the Leviathan natural gas field. The company said this week it was waiting patiently for the Israeli courts to make a decision affecting gas export policies.

The U.S. Geological Survey estimated the Levant Basin has mean probable undiscovered natural gas resources of 122 trillion cubic feet. At current rates of consumption, that may be enough to meet domestic natural gas demand almost indefinitely. Leviathan, the biggest of the Levant fields with 18 trillion cubic feet of estimated recoverable reserves, was discovered three years ago and could start production by 2016. Tamar, with an estimated 10 trillion cubic feet of reserves, started production this year, four years after discovery.

The U.S. Energy Department’s Energy Information Administration said nearly all of the “significant” natural gas discoveries of natural gas made in the last 10 years or so are in the Levant Basin. Most of the discoveries were made in Israeli waters. Lebanon contends some of the natural gas lies within its territorial waters and two years ago, the Israeli military launched drones over its gas fields in the Mediterranean, saying it was fearful of a Hezbollah attack. Hezbollah took its 2006 war with Israel as an sign it could take on its adversaries using conventional military means and, in 2011, Hezbollah pledged to use whatever means necessary to defend Lebanon’s national interests.